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SEC to impose stiffer sanctions on DCS, e-mandate defaulters

The Securities and Exchange Commission, SEC, will henceforth impose tougher sanctions on registrars and dealing member firms of the Nigerian Stock Exchange, NSE, that try to frustrate the on-going e-dividend registration geared towards reducing the quantum of unclaimed divided and the direct cash settlement (DCS) initiative.

According to the SEC in a notice to the operators, registrars that fail to credit any successfully mandated accounted within two days or fails to render quarterly account of all mandated accounts will pay N1 million penalty and an additional sum of N20, 000 for every day the violation persists.

In the same vein, the Commission will impose penalty of not less that N10 million on stockbrokers or any dealing member that fails to credit proceeds of sale of clients’ investment directly into the client’s account.

On the amended e-dividend registration mandate, the SEC said: “Registrars shall ensure that all mandated shareholder accounts are credited with all outstanding unclaimed dividends within two days. This will increase the rate of compliance by registrars and help to reduce the quantum of unclaimed dividends.

“Registrars shall forward status reports on all mandated shareholders accounts on a quarterly basis. Justification: This is to enable the Commission monitor the level of compliance with the E-Dividend Mandate Management System.”

According to the SEC, where BVN is provided, bankers’ confirmation would not be required before shareholders’ accounts are mandated by the registrars, saying that this is to avoid unnecessary delay in mandating shareholders’ accounts.

On , it said: Settlement of exchange-traded securities carried out on a securities exchange shall be done by direct payment into the client’s account by an approved clearing and settlement entity except where a client opts out in writing.

“Where a client opts out, the dealing member shall notify the clearing and settlement entity not less than three business days prior to executing any sale trade on behalf of the client.

All Dealing Members shall provide their clients’ bank account details, including BVN to an approved clearing and settlement entity for purpose of direct cash settlement;

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Where a client does not provide account details, the dealing member shall not execute any sell trade on behalf of the client. 6) Where a dealing member execute a sale trade without account details of the client, the clearing and settlement entity shall ensure that such trade is cancelled prior to the settlement day. 7) Settlement of all sale exchange-traded securities shall be made by direct payment into the client’s account within the clearing and settlement entity’s stipulated settlement cycle.

Contrary to the original rule that forbids fund manager of a Collective Investment Scheme (CIS) from investing the assets of the Fund in securities or assets of related parties to the CIS, fund managers can now invest in instruments of related parties s long as such investment guarantees good yields to the Fund.

According to the SEC, the new rule would ensure a balance of investor protection and achievement of optimal asset allocation potentials as offered by the market.





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